Private equity managers are seeing greater competition for mid-market assets than a year ago, a new survey from alternative industry data provider Preqin reveals, as strong investor appetite and a robust fundraising environment has resulted in a buildup of dry powder and increased pressure on fund managers to do deals.

In contrast, fund managers targeting small and large buyouts are seeing smaller net increases in competition, Preqin said.

Results of the survey, which polled nearly 400 private equity fund managers, were included in Preqin’s H1 Private Equity Fund Manager Outlook. Other highlights from the report:

Across the entire private equity spectrum, 42% of respondents have seen an increase in competition for assets compared to 12 months ago.

However, 51% of fund managers said they saw more competition for mid-market assets, and 44% felt competition for large assets had grown. By contrast, just 35% said the same of small buyouts.

This congestion may be due to the current attraction of mid-market buyout deals: 58% of private equity investors currently feel that mid-market buyouts represent the best opportunities, more than twice the proportion that cited any other fund type or size.

This has seen a large amount of capital become available to fund managers. As of February 2017, mid-market buyout fund managers hold a record $99 billion in dry powder.

Given these conditions, it is perhaps unsurprising that more managers (41%) named valuations as their key concern in 2017 than any other issue.

“Record distributions in recent years have driven investor appetite for private equity, with more fund managers coming to market in order to meet this demand,” said Christopher Elvin, head of private equity products for Preqin. “Strong fundraising has injected a large amount of capital into the marketplace, and with record numbers of fund managers vying for the best deal opportunities, it is unsurprising that competition for assets is rising [and] driving up valuations.”

“However, this increase in competition is not being felt by all fund managers equally,” he added. “The smallest and largest buyout fund managers are not seeing such a sharp increase in pressure. Rather, it is the mid-market that is seeing competition rise most sharply, with increasing numbers of fund managers attracted to the potential risk/return balance offered by assets in this area. Fund managers operating in this space will have to work harder than ever in order to find attractive deal opportunities, and to avoid entering into bidding wars that drive asset prices yet higher.”

Founded in 2003, Preqin is a leading source of information for the alternative assets industry, providing data and analysis via online databases, publications and bespoke data requests. More than 40,000 professionals in 90 nations use the company’s products.